Processors, hardware makers race to serve merchants with open app development

Trying to anticipate merchants’ needs in the fast-evolving digital commerce environment can be expensive — as evidenced by Vantiv's $1.65 billion deal for Mercury Payment Systems in 2014, when the prevailing technology centered on embedded payments.

But even that didn't address all merchants' needs. Vantiv is trying a complementary approach this year by partnering with Germany-based Aevi, a unit of Diebold Nixdorf, to provide a global marketplace of white-label apps for merchants. Aevi will support this marketplace through an open application platform Vantiv controls, aiming to bring more flexible solutions to its small- and midsize merchant clients.

Giving merchants direct access to third-party software isn’t new—First Data’s Clover unit introduced the concept three years ago—but Vantiv is giving its approach a custom-development spin with an app marketplace where developers can play with solutions that work with Vantiv’s SmartPay Series hardware. The platform uses application programming interfaces and software development kits Aevi supplies.

Opening up

“We’re still in the early stages of where we plan to go with an open marketplace for apps, which ultimately will be a platform that allows a developer or a software company to port their solution into our platform anywhere in the world," said Paul Galant, CEO of Verifone.
Bloomberg News

“One of the big problems merchants face is getting locked into an app or a device, when both sides of the equation keep evolving, and we believe the answer is having a single platform that enables merchants to connect any kind of app to any kind of device, so we become a kind of iTunes store for merchant apps,” said Scott DeAngelo, Vantiv’s senior vice president of product, in an interview at Money20/20 this week in Las Vegas.

Its Mercury ISV program isn't going away, but Vantiv hopes its approach—rolling out next year in the U.S. only—will spark more creative solutions for merchants, too.

“Any software developer can write code for merchant apps on our platform, and they don’t have to limit the sphere of end users," he said. "If they come up with a great app, and because our platform is hardware-agnostic, it will work on any brand of payment hardware Vantiv provides, whether it’s through a bank, an ISO or another channel.”

Vantiv’s move could bring it closer relationships with merchants, said Eric Grover, an independent payments consultant.

“With Vantiv’s Mercury model, merchants are getting software bundled in with services, but the software doesn’t come from Vantiv," Grover said. "By offering merchants a menu of software apps on a platform it controls, Vantiv tightens its relationship with merchants and likely also it can capture more of the economics on the back end."

Legacy hardware makers are doing some of the same things.

Verifone for several months has been developing its own developer-centered app marketplace for merchants, and this week unveiled five products including a solution enabling merchants to sync their e-commerce catalogs with merchandise in stores, plus tools to manage customer loyalty, gift cards and workforces.

It’s taken longer for Verifone to get its open platform for apps rolling because of the company’s goal to support solutions globally, said Verifone CEO Paul Galant.

“Verifone operates in 168 countries, and while a lot of available apps are limited to local geography, our strategy is based on security and ubiquity, which requires us to take a global approach,” Galant said. “We’re still in the early stages of where we plan to go with an open marketplace for apps, which ultimately will be a platform that allows a developer or a software company to port their solution into our platform anywhere in the world.”

Clover’s leaders seem unfazed by the competitors’ moves into open application development.

“We have a huge head start in the merchant application market, with developers steadily delivering to specific merchant needs, including observing the privacy and server requirements of different geographies and industry sectors,” said Mark Schulze, Clover’s co-founder and director.

Currently operating in the U.S., U.K. and Ireland, First Data's Clover has more than 300 merchant apps available and a roadmap for rolling out third-party merchant apps to other nations, Schulze said.

“Clover’s model already has made a lot of progress in providing a platform for frustrated developers, and we have a lot of momentum with solutions that work, and we expect to maintain our lead,” Schulze said.

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